Stock market predictions

Since I love to play the game, this is what I see ahead for the stock market. If we’ve not reached that level yet, we’re very close to the bottom, but that one could still be a 15% drop away. Let’s take only one index, the Dow Jones and let’s run the numbers: While hitting a low of 8283 yesterday, the Dow could go reach 7040. Sounds impossible? Nothing does these days. From a practical standpoint, this will be hard to exactly pin-down, but let’s say that if an investor were to enter the market now, he or she might have to sustain some unpleasant tummy aches until the elevator starts returning towards the upper floors. As for when that ultimate dip is likely to happen? I’d say sometime in January, perhaps a few days before Obama’s inauguration. Let’s settle for January 15; we’ll see…

Where’s “Plan B?”

On October 29, I attended the Park City’s Chamber pre-season presentation a forum in which self-congratulations abound. Along with our three local resorts, Deer Valley, Park City and the Canyons, Arnie Weissmann, editor-in-chief at Travel Weekly spoke and express some dire warnings about this year’s snow season. Among other predictions, he said that the economic crisis and higher plane fares are affecting all forms of tourism, and the cruise industry, Las Vegas and eastern ski resorts will make it tough for Park City and the other western resorts. In spite of an admitted decline ranging between 15 to 20% in early bookings as of the end of September, all three resorts and no one in the Chamber’s leadership appeared too worried and what’s worse, there doesn’t seem to be any “Plan B” should the booking situation and visitations keep on deteriorating as the season advances. This to me is denial at its best. We certainly are competing with the cruise business, Las Vegas and other warm destinations, but also against the Vail, Whistler and Lake Tahoe of the world. Why is there no mechanism in place that would declare and promote a roll-back on prices and rates, attractive “specials” on lift tickets and all kinds of creative “product bundling” ideas, should bookings keep on dipping south, in order to steal some clientele from our neighboring destination resorts? Of course, we’ve got too good a product in Park City to even take interconnecting seriously to give our visitors a much better reason to pick us over the rest… I am missing something or has “competition” become a dirty word?

Where’s the bottom?

This is the $64 million dollars question as we’ve already seen a number of recent false starts in the market, also known as “dead cat bounce.” Savvy experts however don’t believe we’ve reached the lowest mark yet. If we’ve seen the ugliest part of the financial crisis, we still need to see how severe that recession will be and which effect it might have on the markets. Further, we’re not quite sure that we have seen yet the “market capitulation” predicted by some. We should also see some more de-leveraging going on between now and the end of the year which will dampen economic growth and slow down recovery. There are also some folks who think that certain emerging markets like Latin America and Eastern Europe might catch Iceland’s “cold” and finally we still have these credit default swaps lurking in the dark and no one really can fathom how big or toxic they are. So, now more than ever, let’s use some more patience if we want to catch a real good glance at the “bottom.”

Presidential transition

Have Detroit fast-track Tesla

We’ve heard more than enough this year about Detroit begging for a bail-out following its biggest fiasco in product-planning history. Not only should our government attach some drastic conditions to any financing aimed at helping the big three U.S. automakers. An great idea and superb opportunity would be to fast-track Tesla Motors, Inc. the Silicon Valley electric automobile start-up into full-fledged mass-production. Currently, there’s just the Tesla Roadster, an all-electric sports car that offers an impressive performance along with a substantial driving range (221 miles - 356 km) and a low powering cost estimated at US$0.02 per mile. Production began on March 17, 2008 and in addition to that model, Tesla is also currently working on a sedan to be introduced as a 2010 model, to compete against the BMW 5 Series and Audi A6. Another future model with a cost in the $30,000 range is to be released in 2012. The idea would be to Detroit’s pool its mass production know-how with all the engineering already developed by Tesla and have Motown act as a contractor in that project. With the proper extra funding and with incorporating Tesla as the flagship of a revived American auto industry, the country could use this synergy as the centerpiece of its new energy policy. This would go a long way to capture everyone’s imagination and would be poised to garner all the support needed to give everyone a solid reason to buy a brand new car.

Enters “deleveraging...”

I am a staunch optimist and never quite accepted in my mind that we could get right on the brink of a total economic collapse. I wasn’t counting on one simple principle, which we might call “wiggle room.” You see, it always pays to have reserves, be they in the body, as extra fat, under the mattress in wads of cash or during a marathon race in the of minutes we’re ahead of our next pursuant. Should something happen with some extra insurance, bad situations can repair themselves pretty fast and we can just keep going...
Today’s economic mess is going to feel much harsher because it’s drastically different than anything we’ve experienced in the past half-century as there are absolutely no reserves left; we’ve run our economic ship aground. Real estate developers as well as retailers have sold merchandise “in advance” of the anticipated needs. In the U.S., consumers have purchased automobiles because they couldn’t pass “employee pricing” or some other gimmick too good to miss. In financial terms, we’re all overbought and this recession is the result of multiple bubbles in the housing and the credit markets that took years to build and could probably take three solid years to correct.
This “overfill” situation will be compounded by a new urge to save as most retirement accounts have recently been so battered that serious “need” may prevail over the frivolous “wants” of consumption. No stimulus package, no extra hand-outs to car manufacturers and other sectors will really alleviate the pain that’s coming. Only old recipes of sacrifice and thrift will do. In other words, a new American revolution!

From Russia with love…

I’ve always dreamed of flying in a “Fulcrum” MiG-29 and that day has finally come! This was last week and I won’t tell you how much my wallet has bled from the fantasy, nor how I’ve exceeded my carbon footprint allocation for the year, but once more I must have muttered “what the heck!” I had planned for a very long time that half-an-hour flight that included breaking the sound barrier (no, I’d never flown the Concorde,) special maneuvers like tail-slide, Pugachev’s cobra, roll, immelman, loop and what they call split-S. Plus a lot of climbing and diving at full throttle as well as high velocity turns and tons of Gs in the process. I flew from Salt Lake to Paris, then to Moscow, and finally we drove to Zhukovsky Airbase with my accompanying interpreter. After a hearty breakfast at the base and the routine security clearance, pre-flight medical check, briefing and getting outfitted in the helmet, G-suit and communication equipment, I looked up at the bird that seemed in pretty good shape and managed to climb up into the tight seat that was adjusted to my size by Igor, the flight squadron chief engineer. Dimka Sidorov was my pilot; he didn’t speak much English if at all, and from the explosive take-off through all the time we managed to stay up in the air, I prayed to God that I’d understand him if he ever screamed “Eject!” I didn’t puke my morning meal, stayed brave and kept my big eyes scared-open the whole ride, that I regrettably found a bit too short when the plane touched down. It couldn’t have been thirty minute…